Don’t cry for Banks, Barbados

As the bidding war for Banks Holdings Limited (BHL) intensifies, Barbadians have been advised to stop being emotional about the company falling into foreign hands.

Managing director of Prestige Accounting Inc David Simpson says the focus should instead be placed exporting more in order to generate more foreign exchange for the country, while creating businesses to attract foreign direct investment.

Simpson said he was not concerned if an enterprise was owned locally or not once the benefits were “ultimately flowing to the country in some form or fashion”, including through tax revenues, employment, increased productivity and output, as well as benefits to other companies.

David Simpson
David Simpson

“I think we have gotten a bit emotional on the issue and in some cases, lucky in this instance Trinidad seems to have gotten off, but historically it has been about Trinidadians buying up everything,” said Simpson.

“My further view is that for a country, especially small states like ours, to really develop and flourish you really need to have the foreign direct investment. And our focus needs to be on creating businesses that can attract that foreign direct investment and then allow us to expand through export; whether it is through services, products or ideas that can then generate revenue and income for the country,” he said.

The certified chartered accountant said traditionally Barbadians have been risk averse and he did not see that changing in the near future. Simpson said he therefore embraced the takeover of any local firms “where it make sense”.

“I am not saying that every Barbadian company should look to give up its ownership for the sake of investment, but we also have to appreciate scale. And for Barbadian companies to really excel like some of our regional counterparts or international counterparts have, we need investment, and we are not going to get that from local shareholders or investors, then foreign direct investment is one of the avenues that we are going to have to use to achieve that,” explained Simpson.

And he said while Barbadians should be encouraged to invest they should not just “hold their investments” as passive things that will give them some money in retirement but should also encourage local companies to become more efficient.

Simpson, a former president of the Institute of Chartered Accountants of Barbados (ICAB), was a panellist at the association’s Accountants’ Week 2015 forum last evening at the Hilton Barbados Resort.

The topic was, Promoting Foreign Direct Investment Versus Encouraging Local Ownership – Striking the Balance!

Economist Jeremy Stephen expressed similar views, but advised that the discussion about foreign direct investment should focus on attracting to start a business rather than to buy shares in an established company.

“This whole debacle over BHL is over a company that never really started here to begin with. In fact, it was a subsidiary of a Guyanese company for a very long time. So the whole idea of companies being Barbadian or being not Barbadian has never made sense to me when I was a full-time economist, or even a financial analyst,” said Stephen, the president of the Barbados Economic Society.

“My main thing is about being able as a country, in an organized fashion, to go ahead as individuals within that country to see investment opportunities without having this idea of national pride behind a brand. Brands are not loyal to the psyche. They can’t be. The only loyalty your brand has is [to] shareholders”.

Financial director of Hinds Transport Services Ltd David Hinds said he preferred to encourage local investment and “more specifically enfranchisement of the masses”, contending that 90 per cent of the people owned just five per cent of the wealth in Barbados.

“And that not only goes for the business wealth, it goes for the land and property ownership as well. So what we think may be a more desirable situation is rather than the people having that money sitting in banks, to invest that money in local businesses,” he said, pointing out that he was “saddened” that the local credit union movement had about $400 million “sitting” on and “sitting still” as the battle for BHL takes place.

And Hinds described foreign direct investment as a form of “economic colonization”.

However, he was quick to agree to that there were a number of benefits including faster economic growth, technology transfers and easier market access.

“So the question of a balance is one that has to be determined by the economic circumstances, the social circumstances and what is desirable and the objective that the Government and the people wish to achieve,” he added.

Meanwhile director of investment promotion at Invest Barbados Kenneth Campbell said he believed both foreign direct investment and local investment had “a very strong role to play”, adding that foreign direct investment allowed for significant revenue for the Government to run its operations. 

4 Responses to Don’t cry for Banks, Barbados

  1. Maureen Smith November 6, 2015 at 2:00 pm

    The time is now for Barbadian citizens to stop being so risk averse. Those who are prepared to take chances will generally do so whenever opportunities present themselves. And as for policymakers on the island, they need to make drastic changes to antiquated practices and procedures that stifle speedy business dealings.

  2. Bernard codrington. November 6, 2015 at 2:17 pm

    Neo-Liberalism has also taken over the intellectual leaders. When i joined the economic profession it was to develop Barbados for Barbadians. It was to give Barbadians a measure of independence and a level of responsibility for our future. Foreign owned companies with no national ties to Barbados will be guided by those who pander to needs of shareholders . Not the welfare of Barbadians. Banks bear earned its reputation as a Barbadian beer. Mount gay rum earned its reputation as a Barbadian rum. It was failure of intellectuals to educate the citizens about economic independence.So Emotion is important. Passion is important. Now I understand why the private sector is waiting for leaders from over and away to get us out of this morass. May the L0ord help us.

  3. Rhonda Simpson November 6, 2015 at 2:35 pm

    Great article cousin!


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